LPL is a complex enzyme containing multiple functional domains that include a site for dimer interaction, a catalytic domain as well as sites for heparin, lipid and cofactor (apoC-II) binding. Although, LPL shares a high degree of homology with pancreatic lipase (PL) and hepatic lipase (HL), there are major differences in substrate specificity, cofactor requirements and heparin affinity. These functional differences have a major impact on the individual role these lipases play in normal lipid metabolism. In our studies, we have utilized the techniques of site-directed mutagenesis and chimera analysis to gain further insight into these important functional domains of LPL. A chimeric protein consisting of the N-terminal 314 residues of human LPL and the C-terminal 147 amino acids of human HL has been expressed in an in vitro mammalian system. Functional characterization of this chimera by determination of hydrolytic activity using different substrates, heparin- Sepharose affinity chromatography and inhibition studies using monospecific antibodies has provided new insights into three important functional domains of the lipase. Thus, the site of interaction of LPL with its cofactor, apoC-II, has been localized to the N-terminal 314 residues of LPL; this region is also responsible for defining the catalytic properties of the lipase. The C-terminal domain, on the other hand, plays an important role in lipid substrate interaction and heparin binding. LPL contains a 22 residue loop defined by cys-216 and cys-239 which like PL may modulate access of the substrate to the catalytic site. Two amphipathic helices are present within this loop. In order to investigate the role of the LPL loop and its helices in lipid substrate interaction 8 different mutants were generated in which the amphiphilic properties of the loop were altered. Disruption of the amphipathic helices abolishes the ability of the lipase to hydrolyze the emulsified substrate, triolein, but not the monodisperse substrate, tributyrin. Substitution of the LPL loop by an equally amphiphilic structure (the HL loop) preserves hydrolytic activity against both substrates. Our studies indicate that the LPL loop and its amphipathic helices are essential for hydrolysis of emulsified, long chained fatty acid triglycerides and thus, provide new insights into the role of the LPL loop in lipid-substrate interaction.